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Lululemon Stock Up As Profit Lifted by Cost Cuts

Lululemon Athletica the retailer of yogawear stock was up in New York after its profit for the fourth quarter exceeded estimates of analysts. The profit was helped by improvements to its supply chain and lower costs.

Profit reached 85 cents per share for the quarter than ended January 31, for the company based in Vancouver. Analysts had estimated that profit would be 80 cents per share.

Sales were up 17% to reach $704.2 million, compared to the average projection of analysts of just over $693.1 million.

Lululemon has put great focus on innovation and efficiency, which has helped boost its results, even as it takes on more competition from different startups and others such as Under Armour and Nike.

The company has focused on hardcore athletes, instead of just the casual fans of yoga, and has created apparel that is more high tech.

Still, the company needed to clear a large backlog of seasonal products, which built up due to the port strike on the West Coast, forcing more reliance on heavy discounts.

Shares increased by up to 11% in New York, which was the largest intraday increase since January 12. The yogawear retailer has seen its stock increase 17% in 2016 through the end of business on Tuesday.

Laurent Potdevin the CEO has been working to fix the supply chain at the company, reduce reliance on expensive air freight and an increase in sales through the additional of innovative products.

The center for research and development has tested new apparel in environments with extreme weather conditions in Alaska.

In certain measures, the new efforts are likely working. Sales at its stores opened for a minimum of one year increased by 11% during the quarter, including orders online.

That surpassed the 8.5% increase that analysts had expected.

Lululemon’s profit forecast for the ongoing year was muted. The yogawear retailer said earnings for the full-year would be between $2.05 and $2.15 per share, which fell short of estimates of analysts of $2.16.

Earnings for the first quarter will be up to 30 cents per share, showed estimates of the company missing projections of analysts of 37 cents.

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